No doubt, a property management company is one of the best ways to protect your rental property investment. But how do you are getting money’s worth and not overpaying?

Step one is understanding property management fees. What is the fee structure? Percentage of received rent, a flat fee, or an ala carte menu? This is no time to be shy about asking questions. Always remember: Low management fees can cost more in the long run. Below are common fees and charges; find out if they are covered in your contract or billed separately.

Front-load costs and escrow accounts. Before your rental property can be marketed, photos need to be taken and listings need to be made, among other preparatory tasks. Some property management companies want the fees up front; others don’t. Is an escrow account required to fund unforeseen and very expensive repairs and how much?

Maintenance and repairs. Is standard maintenance, such as pest control or painting for a new tenant, part of the management fee or billed separately. If a tenant reports a broken garbage disposal, is the repair covered in your agreement or billed at an hourly rate?

Vendor markups. It’s not uncommon for property management companies to add an administrative fee to third-party contractor invoices if they have covered the cost for you. Find out how that is calculated — percentage or flat fee?

Contract renewal. One reason some property management company fees are low is because there’s an annual renewal fee. This isn’t necessarily a bad thing, but it’s something you need to know before taking the business relationship to the next step.

Not telling you anything new, but something that bears repeating: Always read any contract before signing on the dotted line. If something isn’t clear, ask for clarification in writing. You may want to have your lawyer review the agreement. Make sure your goals for your investment property are aligned with the services provided. How involved do you want to be as a Landlord? Even if you want to give the property management company carte blanche to take care of everything, prior due diligence on your part is necessary.

Want to know how we can protect your rental property investment and grow its returns? Contact Place Tenants at 800-886-1193 or [email protected]. We look forward to preparing a complimentary Rent Analysis for you.

Credit: iStock/Javier Dall